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Keith McCambridge

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Being a true CEO – Making trade-offs

A CEO I used to work with came into his coaching session one day, clearly annoyed. “I hate being a CEO sometimes” he said, “All the easy, 70% - 30% decisions have already been made further down in my organisation – that leaves me to deal with the 49% - 51% calls and they’re hard!” His point was well made – although interestingly, I would count him as one of the better CEOs, as at least he recognises these marginal calls as his job and is willing to make them.

CEOs are usually grown and developed over many years. The career paths they follow generally provide them with a range of experiences and tools that prepare them for the top role. The majority of CEOs have gathered this learning in their thirties, early enough for them to scale their experience across several organisational levels before reaching for the yellow jersey. These experiences can include managing a multi-functional team, managing in diverse environments, running a full P&L and critically, making strategic trade-offs and being around to witness the consequences of them.

It is these ‘trade-offs’ that my CEO coachee was referring to, and the ability to make them quickly and successfully at the top level is a real differentiator. The expression ‘trade-off’ is accurate – it implies there is up-side and down-side, it suggests the need to balance risk with reward – in short it indicates there is rarely a perfect solution that has no cost, and outcomes cannot always be fully and accurately anticipated.

Of course, risk can be mitigated through experience, analysis and research. Indeed, many larger businesses have armies of people attempting to read the future so risk can be minimised. There are some CEOs who rely heavily on this analysis, yet the great ones understand that timing is crucial, and that sometimes this necessitates making a decision even when they do not have all the information they would like. Their intuition, honed over years of experience making trade-offs at lower levels in the organisation, adds to the analysis and gives the CEO commercial instinct. Usually, they have tried, failed and succeeded many times, refining their judgement through trial and error. As one famous military leader said, “A good General knows when the decisive moment in a battle is – a great General knows what to do with it.”

Making these trade-offs can be a nerve racking thing to do – fundamentally you cannot be sure of the outcome given the dynamic and competitive environment in which most businesses operate. That said, how you deliver these decisions is very important – if your fears or anxieties show in the manner with which you communicate and implement, the organisation (and sometimes even the market) will sense it and have doubts themselves. Suddenly the confidence that is so critical to business success is undermined. This ability to make trade-offs with conviction requires character, courage and nerve.  A leader and especially a CEO must give his or her organisation belief in the direction chosen, even if the decision is a marginal 49%-51% call.

So, I empathised with the grumpy CEO that day he came in, frustrated by the narrow margin of error he was facing. But then I reminded him he had been working all his life to have the opportunity to truly lead an organisation – he did ask for it and frankly, he would be bored if the decisions were easy. Our objective that day became to explore the decision, and help him arrive at a point where he could feel comfortable with his choice, and communicate it compellingly.

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